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Comparison: Postal Service and Federal Government

The Institute for Research on the Economics of Taxation’s Michael Schuyler has written an interesting paper that compares the federal government’s bleak financial situation to that of the U.S. Postal Service. The entire paper is a good read, but here are a few key points:

Congress is helping to run the USPS into the ground (see here for example). Congress is helping to run the government’s finances into the ground. We can’t separate Congress from the federal budget, but putting more space between Congress and the USPS could – and should – be done.

The USPS is broke and it’s about to max out its $15 billion line of credit with the U.S. Treasury. Yet, Schuyler says that “the Postal Service is a model of financial rectitude compared to the overall federal government.” Yikes.

The federal government gets the bulk of its revenues from taxation, which it extracts from citizens through force. The USPS depends on revenues generated from the sale of products and services. Thus, the USPS is on a “tighter leash.” As a result, the USPS has had to make more of an effort than the federal government to cut costs. Tightening the federal government’s “leash” by imposing restrictions on its ability to spend and borrow could help.

The federal government’s “gaping fiscal hole” makes it harder to justify a bailout for the USPS. Schuyler says that Congress should instead allow the USPS “greater operational flexibility to lower costs in ways that would bring large savings relative to the inconvenience for mail users.”